With so much in the news about fires, you're probably wondering does homeowners insurance cover fires? Every year there are over 1.3 million fires in the U.S. that cause over $25 billion in losses according to FEMA.
Unfortunately, fire counts are on the rise as wildfires are getting worse each year. Fortunately, by the end of this post you'll have a better understanding of what homeowners insurance is and when fires are covered.
Fires Are Stronger And More Frequent
When I woke up this morning, I was confused. My watch said it was 6:30 a.m., but there was no sunlight shining through the curtains. I got out of bed and looked outside. The sky was an eery, dim reddish orange color and the sun was nowhere in sight.
Fast forward to 11 a.m. and the sky hasn't changed. I feel like I'm on Mars. Where is the sun?! Well, sadly this is what happens to the sky when there are raging wildfires in places like California. And what's nuts is the smoke and ash filling the sky this morning in San Francisco is coming all the way from Oregon.
What Does Homeowners Insurance Cover?
If you are a property owner, homeowners insurance is a must. Not only is your home likely your most expensive asset, it's also probably your largest liability as well.
Therefore, given the significance of your home to your overall net worth, protect your finances with homeowners insurance. One of the best places to get homeowners insurance is through PolicyGenius. You can get fast, free quotes from the best homeowners insurance carriers.
Homeowners insurance is comprised of coverages that can help pay to repair or replace your home and belongings if they are damaged.
Typical homeowners insurance covers damages caused by theft, vandalism, hail, lighting strikes, windstorms, and fire. I'll get into more detail on homeowners insurance fire coverage below.
Homeowners insurance typically helps cover:
- Your dwelling
- Other structures on your property
- Personal property
- Liability
In addition, it also often covers costs if you accidentally damage another person’s property or if a visitor is injured at your home.
However, homeowners insurance isn't all encompassing. For example, earthquakes and floods are not typically covered. They require separate insurance policies and can get quite expensive.
Does Homeowners Insurance Cover Fires?
Ok, now let's focus in on homeowners insurance and fires. Typically, a standard homeowners insurance policy offers protection for smoke and fire damages.
For example, let's say a fire causes so much damage that your home is no longer inhabitable. Fortunately, a homeowners insurance policy can help pay to rebuild it. In addition, it can also cover additional living expenses for your temporary housing costs.
However, the big catch is where your home is located. Things can get hairy if you live in a high risk fire area. Owning a home in a high risk fire area can make getting homeowners insurance difficult. In addition, you may be required to get a standalone fire coverage policy.
When applying for a homeowners insurance policy always ask if the policy has a fire exclusion or not. If there is no fire exclusion, you're covered.
Unfortunately, if the policy has a fire exclusion the insurance carrier will not cover damages from fires. You'll have to get a separate policy specifically for fires.
Coverage For Fire Damages
Does a homeowners insurance policy cover fires? Well, for standard policies, here are some typical things that are covered:
- Reconstruction
- Debris cleanup
- Replacement of damaged belongings
- Appliance repair or replacment
- Reimbursements for damaged foliage
- Arson damages (unless caused by someone living in your home or if the property has been vacant for 60+ days)
Of course, the total amount of reimbursements will depend on the predetermined coverage limit of your homeowners insurance policy.
Standalone Fire Insurance Coverage
If your homeowners insurance policy has a fire exclusion, you should look into purchasing standalone fire insurance.
Damages caused by lighting and fires are the most expensive claims. In addition, policy cancellations and non-renewals are becoming more common in fire prone areas.
FAIR Plans (Fair Access to Insurance Requirements)
Twenty-eight states offer FAIR insurance plans for homeowners that live in high-risk areas that are ineligible for plans on the voluntary market.
FAIR stands for Fair Access to Insurance Requirements. They are also known as shared market plans or residual market plans. Unfortunately, they can be pretty expensive.
But, they can help get your home covered from fires, windstorms, hurricanes, even riots. I recommend always trying to get insured through the private market first before considering state insurance programs.
Which States Offer FAIR Plans?
Here is a list of states that currently offer FAIR plans. If you are unable to get a homeowners insurance policy due to living in a high-risk area, look into a FAIR plan.
- California
- New York
- Texas
- Alabama
- Connecticut
- Delaware
- District of Columbia
- Florida
- Georgia
- Hawaii
- Illinois
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maryland
- Massachusetts
- Michigan
- Minnesota
- Mississippi
- Missouri
- New Jersey
- North Carolina
- New Mexico
- Ohio
- Oregon
- Pennsylvania
- Rhode Island
- South Carolina
- Virginia
- Washington
- West Virginia
- Wisconsin
DIC Policies (Difference In Conditions)
In addition, in some states like California, homeowners often pair a FAIR insurance plan with a DIC policy. DIC stands for Difference In Conditions. If you have a standalone fire insurance plan, a DIC can offer coverage like:
- Water damage
- Theft
- Liability coverage
- Freezing pipes
- Vandalism
- Weight of ice or snow
- Medical payments
Homeowners Insurance Resources
Are you looking for more answers to questions beyond Does homeowners insurance cover fires? Check out these additional resources
How much homeowners insurance do I need? Use this guide to figure out the right amount of coverage for your individual needs.
Should I purchase natural disaster insurance? This article walks through the various types of natural disaster insurance and when it's worth purchasing.
How do I find an affordable homeowners insurance policy? Get free online quotes fast from top insurance carriers using Policy Genius.
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About the Author: Sam worked in finance for 13 years. He received his undergraduate degree in Economics from The College of William & Mary and got his MBA from UC Berkeley.
In 2012, Sam was able to retire at the age of 34 largely due to his investments that now generate roughly $250,000 a year in passive income. He spends time playing tennis, taking care of his family, and writing online to help others achieve financial freedom too.
Sam started Financial Samurai in 2009 and has grown it to be one of the largest independently owned personal finance sites in the world.